PHOTO VIA DESANTIS/TWITTER
Inflation continues to help boost state tax collections, but economists warn that will change as higher prices affect consumers’ shopping habits.
General-revenue tax collections in March topped projections by 21.5 percent, according to a report posted online Thursday by the Legislature’s Office of Economic & Demographic Research.
Economists earlier had projected the state would collect nearly $2.906 billion in general revenue during the month. But the state topped the projection by $626 million, with nearly 80 percent of the gain coming from sales taxes, the report said.
“The immediate response to inflation is an increase in sales tax collections that reflects the higher prices,” the report said.
However, the report added, “Persistent inflation conditions will ultimately suppress collections as consumers begin to spend more money on non-taxable necessities like food and health care.”
Gov. Ron DeSantis has blamed federal economic policies for the global inflation and on Wednesday cited higher prices as part of his justification for vetoing a controversial bill involving the rooftop-solar industry
“Given that the United States is experiencing its worst inflation in 40 years and that consumers have seen steep increases in the price of gas and groceries, as well as escalating bills, the state of Florida should not contribute to the financial crunch that our citizens are experiencing,” DeSantis’ veto message said.
Meanwhile, the monthly report from economists flagged a “subpar” personal savings rate for Floridians.
The rate, the percentage of disposable income that people save, has held at 6.3 percent the past two months.
In the 2018-2019 fiscal year, before the COVID-19 pandemic, the rate was 7.9 percent.
Aided by federal stimulus money, the personal savings rate ballooned to 33.7 percent during the early stages of the pandemic.
General revenue is closely watched in state government, as legislators use it to fund key portions of education and health-care programs and prisons.
Another report issued Thursday by the U.S. Department of Labor showed that first-time unemployment claims in Florida continued at a pace similar to the period before COVID-19 slammed into the economy in early 2020. The Labor Department estimated that 5,024 initial claims were filed in Florida last week.
That estimate was down from a revised count of 5,668 claims during the week that ended April 16 and below a running 4-week average of 5,620 claims a week.
Florida’s unemployment rate in March was 3.3 percent, according to the state Department of Economic Opportunity. The rate, down from 5.4 percent a year earlier, represented an estimated 339,000 Floridians qualified as out of work from a labor force of 10.51 million.
The state agency is scheduled to release an April unemployment report on May 20.